Paying off high interest debt first is vital
The majority of people in the UK are likely to have some form of mortgage, possibly a personal loan, credit card and perhaps an overdraft. While unlikely at the moment, many of us will at some point possibly come into money and have the chance to pay off a large part of outstanding debt. In this situation it is vital that you pay off the debt which attracts the highest interest as opposed to perhaps overpaying on your mortgage when you are up to date and the rate is relatively low compared to credit cards, personal loans and overdrafts.
While there is no point saying that everybody in the UK should be debt free, because debt is actually required to allow us to grow and acquire a home, etc, if you leave debts with highest interest charges they will continue to build up and you will end up paying-off more and more interest and less and less capital. The more capital that you can pay off in the short term the less interest this debt will attract and the quicker you will pay off the overall balance.
It can be difficult to get your head around how and when to pay off a debt and this is where a financial adviser may well come in very useful.
Share this..
Related stories
UK government turns the screw on Royal Bank of Scotland
The UK government would appear to have turned the screw on the Royal Bank of Scotland, which is 84% state-owned. The bank has today confirmed that it will cap business arrangement fees for loans and overdrafts at 1.5% for at least the next 12 months at a time when small businesses in the UK (i.e. those with turnover below £25 million) are struggling. So what's does this really mean for UK busines...
Read MoreBarclays And RBS Raided By Antitrust Regulators
In a move which has again put the banking sector in the headlines for all of the wrong reasons it has been announced that both Barclays Bank and Royal Bank of Scotland were raided by the UK Antitrust regulators twelve days ago. While it has been confirmed that the raids were in connection with the alleged price fixing of loans to various accountants, lawyers and an array of other professional ser...
Read MoreA&L fined £7m by FSA
Alliance & Leicester (A&L) has been fined £7 million by the Financial Services Authority (FSA), the regulator announced today. Shoddy sales practices for payment protection insurance (PPI) between January 2005 to December 2007 mean that many customers could have been mis-sold the cover, the FSA said.A&L was found to not have made it clear to customers that taking out the cover was voluntary.The p...
Read MoreWho will pay the eventual cost of the £3.5 billion write-off?
The Bank of England report this week which suggested that UK banks and building societies have written off £3.5 billion of consumer debt between April and June 2010 has shocked many people. Aside from the fact it is a concern that UK consumers are so heavily mired in debt it is also a surprise that the banks have agreed to write off such a large level of debt. But who will pay the eventual cost?...
Read MorePayday lender Wonga reports £37.3m loss
21/04/2015 Controversial payday lending company Wonga has reported a pre-tax loss of £37.3m for 2014. The losses are in stark contrast to the year earlier, when pre-tax profits of £39.7m were reported by the company. Wonga has been significantly less active in the market over the last 12 months, as lending volumes fell to £732m, from £1.1bn in 2013. One of the major contributors t...
Read More